TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 818
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....mping of Urea Synthesis Plant and cleared the same at concessional rate of duty in terms of the above notification. 2.2 In the year 2002, the appellants had shut down the plant and disposed the entire plant and machinery consisting of old as well as new machinery by e-auction through their selling agents viz. M/s.MSTC Bangalore and M/s.Metro Machinery Traders, Delhi was successful bidder in the auction for an amount of Rs. 132 crores on 1.4.2005. The imported goods as above which were cleared under the concessional rate of duty forming part of the plant and machinery were also disposed. Such disposal was alleged by Customs as violation of the condition of notification on the ground that imported goods have not been put to intended use but were sold. The imports were subject to the condition of consumption thereof within India for the intended purpose as required by the customs notification. The DRI Chennai seized the imported machinery vide mahazar dt. 14.9.2006 and handed over the same to the appellant. But those were released provisionally on execution of bond for Rs. 23 crores and giving of bank guarantee of Rs. 3.0 crores executed by NLC. 3. After detailed investigation....
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....on No. 120/99. The said entry reads as under:- No. Chapter or heading No. or sub-heading No. Description of goods Standard rate Additional duty rate Condition No. 142. Any Chapter (A) Machinery, instruments, apparatus and appliances, as well as parts (whether finished or not) or raw materials for the manufacture of aforesaid items and their parts, required for renovation or modernization of a fertilizer plant; and (B) spare parts, other raw materials (including semifinished material) or consumables stores, essential for maintenance of the fertilizer plant mentioned above 5% 10% 24 4.3 The developer filed 22 Bills of Entry for import of the equipment, spare parts and installed the same in the factory of the appellant. Upon installation, the Ammonium Plant factory operated for 22 months. But thereafter, it was again found infeasible due to reason beyond control of the appellant for which a further study was made by ICICI to suggest to the appellant whether it should continue the manufacturing of fertilizer in the said plant or to dispose of the same. Basing on the recommendation of ICICI, which was made in April 2001, the plant was auctioned. 4.4 Urea plant of the appe....
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....ustoms, New Delhi 2000 (120) ELT 736 held that the person who is liable to duty is the importer but not anybody else. Therefore, show-cause notice issued after a long time in 2007 for the import of a decade old shall not bring the appellant to the liability. Accordingly, neither duty nor penalty is imposable on the appellant since it was not an importer. Further, relying on the decision reported in AIR 2003 SC 2629 in the case of Oil and Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd., it was submitted that public policy being to avoid further losses of a PSU, any disinvestment made in accordance with such Policy shall not be treated as deliberate disposal of the Plant to bring the appellant to the consequence of law. 5.1 The Ld. A.R appearing for the Revenue on the other hand, submitted that the appellant was beneficiary of the entire import for its own plant on the basis of duty concession certificate issued to it. Therefore, it was the owner of the goods for which it is liable to duty as well as interest and penalty. PDIL was only a bailee to act as intermediary who filed the Bills of Entry on behalf of the appellant while the ownership of the goods was ....
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.... Vs. CCE, Hyderabad reported in 1994 (73) ELT 769 (S.C.) to submit that exemption being an exception that calls for strict construction to grant benefit at public cost. Therefore, the grant of benefit cannot be abused. Accordingly, appellant is liable to the consequence arose out of adjudication. 5.7 Relying on the decision in the case of CCE, New Delhi Vs. Hari Chand Shri Gopal reported in 2010 (260) ELT 3 (SC), Revenues prayer is that substantial compliance being necessity of law such a doctrine cannot be loosely interpreted to grant any relief to appellant since public interest has suffered huge duty demand. Further, relying on the decision in the case of Commissioner of Customs Vs. Virgo Steels reported in 2002 (141) ELT 598 (SC) Revenue submitted that substantive provision of levy of duty requires recovery through the provisions of Section 28 of the Customs Act, 1962. Since appellant did not pay appropriate duty while importing the goods but has paid part of that availing concession unduly, question of any time bar does not arise to defeat the grant of notification. In absence of compliance to the statutory mandate, appellant fails to....
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....8,538/- (Rupees Ten Crores Two Lakhs Forty Eight Thousand Five Hundred and Thirty Eight Only) (as detailed in Annexure I and Annexure II of SCN) arising out of the above along with applicable interest is to be demanded under Notification Nos. 20/99-Cus. and 16/2000-Cus. as amended, read with Sections 12 and 143 of Customs Act, 1962; (c) Whether an amount of Rs. 5,46,915/- voluntarily paid by them towards the imported surplus material taken back by M/s. PDIL, Noida is to be adjusted against the differential duty liabilities; (d) Whether the seized goods which were released provisionally valued at Rs. 23 crores are liable to confiscation under Section 111(o) of the Customs Act, 1962; (e) Whether the imported goods relating to the urea synthesis section which were dismantled and cleared prior to the initiation of investigation by DRI valued at Rs. 33,52,78,239/- are to be held liable for confiscation under section 111(o) of the Customs Act, 1962; (f) Whether Shri Sampath Kumar, Deputy General Manager, Fertilizer Plant, M/s. NLC and Shri A.R. Ansari, Director, Planning and Projects M/s. NLC Limited, Neyveli are liable for penal action under section 112(a) of the Customs....
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....e purposes specified above. (2) the value of import of the goods specified in sub-clause (b) of clause (ii) of sub-condition (1) shall not exceed 10% of the value of imported goods specified in sub-clause (a) of the said clause; (3) if the importer furnishes an undertaking to the Assistant commissioner of Customs to the effect that the said imported goods shall be used for the purposes specified above and in the event of his failure to use the goods for such purposes, he shall pay an amount equal to the difference between the duty leviable on the said imported goods but for the exemption under this notification and that already paid at the time of importation." 10. As seen from the above, Condition 24 (3) stipulates that importer shall furnish an undertaking to the Asst. Commissioner of Customs to the effect that the said imported goods shall be used for the purpose specified and in the event of his failure to use said goods for such purpose, he shall pay an amount equal to the difference between the duty leviable on the said imported goods but for exemption under this notification.The appellants main contention that the goods were imported for revamping of the fertilizer plant ....
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.... the third party M/s.Metro Machinery Traders, Delhi. Therefore, the imported plant and machinery were not used for manufacture of fertilizer. Considering this undisputed fact, the reasons for shut down of the plant is irrelevant in so far as the customs exemption availed under Notification No.20/99 and 16/2000 is concerned. Therefore, disposal of imported goods did not serve intended purpose of the notification. That frustrated object thereof. 13. On perusal of records and various statements recorded from Mr.Ansari, Director, Planning, Project, Mr.Sampath, DGM, V. Mohan, DGM & Company Secretary, K. Viswanath, Company Secretary, it reveals beyond doubt that in spite of Disinvestment Commission report dated March 1998 recommending for closure of Fertilizer plant, the NLC in its 287 Board Meeting held on 5.5.97 took decision to revamp the fertilizer plant. When the revamping was under progress on 14.12.99 study was also conducted by M/s. ICICI for feasibility study/commercial viability of fertilizer plant. 14. Appellants imported machinery through PDIL for Ammonia Synthesis in 1999 and during May & August 2000 appellant themselves imported machineries for Urea Plant without wa....
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.... Shri Harish Durgon, Partner and Shri Ramkrishnan Gupta, Partner of M/s. Metro Machinery Traders, Delhi (successful bidder/awardee) in their statements dt.21.9.2006 and 10.10.2006. They have clearly admitted that they have to bear all duties and taxes as stipulated in the e-auction but there was no mention of any payment of customs duty on the imported machineries. Nothing was explained by the appellant for no provision of customs duty in the e-auction when they were fully aware that the sale of the Fertilizer Plant was renovated by using imported machines availing conditional exemption under the Notfn 20/99 and 16/2000. When the whole plant was sold for Rs. 132 Crores to third party i.e. M/s.Metro Machinery Traders, Delhi, nothing prevented the appellant to collect the differential customs duty on imported goods contained in the plant which was sold. Therefore, it is difficult to extend any relief to appellant in so far as recovery of differential duty is concerned. 18. It is pertinent to state that, when a fertilizer plant of large scale capacity was renovated/revamped using imported machinery the intention of legislature in granting exemption was to use the same continuously fo....
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....32) E.LT. 534 (Bombay) (ii) Commissioner v. Raghuvar (India) Ltd. - 2000 (118) E.L.T. 311 (S.C.) 13. We find that while Section 12 gives the power to levy customs duty, Section 25 gives the power to grant exemption of duty in the public interest either absolutely or subject to conditions. In the case of Notification No. 64/88, the exemption granted is conditional. The conditions relating to (i) free treatment of 40% outdoor patients and (ii) reservation of 10% of beds for free treatment of patients with family income less than Rs. 500 p.m. make it manifestly clear what the public interest behind the said exemption is. If these conditions are not fulfilled after importation and the public interest is not served, the exemption becomes unavailable and full duty as leviable under Section 12 becomes payable. 14. We note that the impugned notification has not provided for obtaining any bond or bank guarantee for recovery of duty in the event of failure to fulfil the conditions of free treatment. However, it is the prerogative of the Government to grant exemption, as has been held in Sri Sathya Sai Inst. (supra), and it is for the Government to incorporate appropriate provisions. Mere....
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.... payment of customs duty with the sole object that 40% of all outdoor patients and entire indoor patients of the low income group whose income is less than Rs. 500/- p.m. would be able to receive free treatment in the Institute. That objective must be achieved at any cost, and the very authority who have granted such certificate of exemption would ensure that the obligation imposed on the persons availing of the exemption notification are being duly carried out and on being satisfied that the said obligations have not been discharged they can enforce realization of the customs duty from them.The Apex Court has thus clearly held that the said Notification No. 65/88 casts a continuing obligation and that in the event of failure to discharge that obligation, duty is demandable." The ratio of the Apex Court is squarely applicable to the present case as the appellants have not fulfilled the condition of the Notification. The Sl.No.3 of the condition (24) of the notification is specific, clear and unambiguous and as per the condition the appellants had given undertaking before Asst. Commissioner of Customs that the imported machineries shall be used for manufacturer of fertilizer. When ....
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....ertain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. In Tata Iron and Steel Co. Ltd. (supra), this Court held that the principles as regard construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning wherefor the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed literally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning if the same is directory in nature. Doctrine of substantial compliance and intended use : 24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the essence or the substance of the requirements. Like the concept of reasonablenes....
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....ts are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential." The above Apex Court's decisions are squarely applicable to the present case as the exemption under Notification No.20/99 & 16/2000 is subject to the fulfillment of Condition No. (24), No.(27). The wordings used in Sl.(3) of the condition is that the appellant shall use (emphasised) the imported machinery for manufacturer of fertilizer and if they failed to fulfill they shall pay the differential duty. The word shall (emphasized) used in the notification signifies that it is a mandatory condition. It is established that the appellants failed to comply to the said condition. Mere fact that the imported machineries were installed and temporarily put to use and thereafter sold does not amount to fulfillment of the mandatory condition. Therefore, we are of the considered view that the notification casts continuous obligati....